Author Topic: Which industries are currently UNDER-earning?  (Read 3358 times)

gjangal

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Re: Which industries are currently UNDER-earning?
« Reply #10 on: February 14, 2018, 11:50:04 AM »
Indian OTAs

KJP,

I am curious to know why you think Indian OTA's are under earning. How do you think about competition from booking.com in that space? I think indian OTA's also don't have an agency model. They buy inventory and guarantee revenue to the hotels. This is not very capital efficient. Sometimes they sell at a loss to gain market share

There are other players like ZO rooms ( Backed by Tiger Global) and OYO rooms that are competing with YTRA and MMYT. Seems like a competitive space in a nascent industry

Curious to know your thought process

Thanks







Nell-e

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Re: Which industries are currently UNDER-earning?
« Reply #11 on: February 14, 2018, 12:06:08 PM »
Active asset managers have been hurt by the popularity of passive ETF investing.
 Do people think customers will go back to active managers anytime soon?

How about agricultural commodities?  Not familiar with that space.
 

KJP

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Re: Which industries are currently UNDER-earning?
« Reply #12 on: February 14, 2018, 02:31:56 PM »
Indian OTAs

KJP,

I am curious to know why you think Indian OTA's are under earning. How do you think about competition from booking.com in that space? I think indian OTA's also don't have an agency model. They buy inventory and guarantee revenue to the hotels. This is not very capital efficient. Sometimes they sell at a loss to gain market share

There are other players like ZO rooms ( Backed by Tiger Global) and OYO rooms that are competing with YTRA and MMYT. Seems like a competitive space in a nascent industry

Curious to know your thought process

Thanks

The Indian OTAs are more of a mix with a respect to an agency model than Priceline.  For example, Yatra appears to do air and hotel on an agency basis, but take primary risk on packages.  See, for example, the description of "net" versus "gross" revenue recognition  for the various revenue buckets on page 60 of Yatra's Form 20-F.

More broadly, I think you captured why the industry as a whole is currently underearning -- right now it's a fiercely competitive land grab where companies are spending money hand over fist on marketing and promotions to get scale and, hopefully, customer loyalty.  That's causing everyone to lose money right now.  I don't believe the capital spigots will flow forever.  So, eventually things will shake out and somebody or a few somebodies in the industry are going to make money.  That's what ought to happen where you're talking about a distributor that sits in the middle, with millions of buyers on one hand and more than 100,000 hotels on the other hand.  That's the basis of my belief that the industry as a whole is underearning what it should.  Unlike many of the other industries mentioned on this thread, the underearning I'm suggesting is coming from the immaturity of the industry, rather than cyclicality. 

As for Priceline (booking.com and Agoda), do they have the stomach to throw money at India like MMYT, Yatra, et al. are doing? The commentary in Priceline's Q2 call about the difficulties public companies (particularly mature ones) have with pursuing that kind of strategy suggests it may not.  Moreover, other than deep pockets, Priceline has no special advantage in India.  Instead, it's got to get on the ground and build its hotel network and brand awareness just like everyone else. 

Even if they are correct (and they may not be), are any of the thoughts above actionable?  I haven't yet invested based on them, because I'm not smart enough to figure out who will be left standing.  MMYT may also spend Yatra into oblivion, forcing it to be bought out on the cheap.       

« Last Edit: February 14, 2018, 02:36:32 PM by KJP »

Cameron

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Re: Which industries are currently UNDER-earning?
« Reply #13 on: February 14, 2018, 03:15:36 PM »
Foods Producers.

Nell-e

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Re: Which industries are currently UNDER-earning?
« Reply #14 on: February 15, 2018, 02:23:06 AM »
Here's a slide deck from Ensco, an offshore contract drilling services provider to the oil and gas industry.  Slide 4 shows the long term history of the company's offshore rig count.  Does anyone have an opinion on where we are in the cycle with this industry?  Rebound or double dip?

https://seekingalpha.com/article/4146715-ensco-esv-presents-23rd-annual-credit-suisse-energy-summit-slideshow

Spekulatius

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Re: Which industries are currently UNDER-earning?
« Reply #15 on: February 15, 2018, 04:41:14 AM »
US workforce? 20+ years of stagnating incomes coming to an end, maybe?
To be a realist, one has to believe in miracles.

Cigarbutt

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Re: Which industries are currently UNDER-earning?
« Reply #16 on: February 15, 2018, 05:06:39 AM »
"US workforce? 20+ years of stagnating incomes coming to an end, maybe?"

Just finished Homo Deus, by Yuval Harari:
https://www.amazon.com/Homo-Deus-Brief-History-Tomorrow/dp/0062464310

Of course, who knows the future but his take would imply that advancing technology will tend to increase the divide between those who bring value and the regular Joe.

CorpRaider

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Re: Which industries are currently UNDER-earning?
« Reply #17 on: February 15, 2018, 10:51:29 AM »
Yeah.  All of them, except retail and financials.  I predict labor is going to take back a bigger share either in the market place or the ballot box.